Sales grew 40%. The cash position got worse.

Growth consumes cash long before it produces any, and most businesses discover the exchange rate only when the overdraft tells them.

By Steve 5 min read
Abstract bridge artwork for Sales grew 40%. The cash position got worse.

A business can be more profitable than it has ever been and closer to the edge than it has ever been, at the same time, for entirely mechanical reasons. Nothing has gone wrong. No customer has failed to pay. The order book is the best it has looked. And yet the balance on the day before payroll is lower than it was a year ago, when trading was worse. This is one of the most common and least understood situations in a growing small business. It is not a sign…

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